More oil royalty, not Petronas projects

Some Barisan Nasional leaders have a myopic view of Petronas' contributions to Sabah.

KOTA KINABALU: Sabah Barisan Nasional assemblyman Karim Bujang has come under heavy attack for saying that it is better to have more Petronas projects in Sabah than increasing the state’s oil royalty.

Karim, who is Bongawan state assemblyman, had said that Petronas had “done much” and had contributed “significantly” to the state economy.

He claimed Petronas had spent billions of ringgit to implement various projects in Sabah that directly benefit the people, including local contractors as well as the economic spin-offs which were enjoyed by locals.

But local leaders here disagree and are of the opinion that Karim is talking rubbish.

Kota Kinabalu MP Hiew King Cheu ticked off Karim over his “short-sighted and narrow” views.

“Maybe, Karim cannot see the significance of having higher royalty rate from the current 5% to 20%.

“Petronas is not doing Sabah a favour. The projects put up by Petronas in the state are definitely in the clauses in the agreement signed a long time ago.

“Sabahans deserved it anyway. It is our right to enjoy all the developments and benefits from it (agreement).

“But the question here is, why didn’t we see all these projects being put up in the past decades? Was Petronas not aware of these terms in the agreement before?” he asked.

Hiew said any increase in the royalty rate on oil and gas will increase the revenue of the state.

“This increased revenue will surely out-beat the project costs in the long run,” he said, adding that over the past decades Sabah had only received RM5.3 billion from Petronas.

No benefit from projects

Many here feel that Sabah, as the largest gas producer and the fourth largest crude oil producer in the country, has been shortchanged.

They believe that Petronas should do more for the state.

Hiew said if the royalty rate is increased to 20%, then Sabahans will enjoy an instant injection of state fund and the state financial status will then improve.

“The most important point now is to review Petronas royalty agreement. If Petronas brings projects into Sabah, can the local people see some instant benefits?

“I doubt it… maybe a few of the BN contractors and other expatriate contractors can get jobs.

“How long do we have to wait for a return from these projects, another five or 10 years?

“By then our oilfields may have already run dry,” he said, adding that the scenario was not impossible, especially when Sabah’s oilfields are not in the form of a seam layer but pocketed and spread out in the sea.

He said the extraction cost in such situations would be much higher and as such, it was sometimes not economical to work such fields.

“Some of the oilfields have already closed down. This means that Sabah will have to make the best use of the time to gain better royalty rates now or never, and before the oil and gas ran out eventually.

“We cannot allow this to go on,” he said.

Petronas neglected Sabah

Hiew is not alone in his views.

Last month, another opposition member Dr Roland Chia accused Petronas, which incidentally derived the bulk of its wealth from Sabah, of spending lavishly on projects in the peninsula while ignoring Sabah.

Sabah, he said, was right at the bottom in the country’s poverty index.

Chia, who is Sabah PKR secretary, said Petronas had neglected its corporate social responsibility (CSR) to Sabah.

Instead, the oil company was reportedly spending billions of ringgit on sponsoring sports cars to participate in the F1 circuit, and financing the elite Prince Court Medical Centre (PCMC) in Kuala Lumpur.

Critics have complained that Petronas spent RM544 million on PCMC and this contrasted with the RM47 million the company spent over the last 36 years (from 1975 to 2011) on its Education Sponsorship Programme (PESP) in Sabah, which works out to RM1.3 million a year

Sabah has the highest poverty rate, with 42% of the nation’s poor living in Sabah.